Thursday, May 28, 2009

HR Practices: Job Evaluation

Job analysis and evaluation (JAE) is the process of creating a structure that establishes the worth of each job to the organization and typically is based on the jobs content (such as the skills needed, job duties, and working conditions) or its external market value and not on the abilities of the individual performing the job. The Job evaluation process was started with the intention of providing Role Clarity to all the employees. Job titles can often be misleading - either unclear or unspecific - and in large organizations it's impossible for those in HR to know each job in detail. This is where JAE helps to understand the each role.
It is essential to have clear, detailed and up-to-date job descriptions on which to base the job evaluation. The JAE data can be meaningfully used for the following processes:
* Recruitment and Induction
* Determining pay and grading structures
* Ensuring a fair and equal pay system
* Deciding on benefits provision - for example, bonuses and cars
* Comparing rates against the external market
* Undergoing organizational development in times of change
* Undertaking career management and succession planning
* Reviewing all jobs post-large-scale change, especially if roles have also changed.

Jobs are basically measured against 3 major factors:
Know How (KH) - Inputs
Problem Solving (PS) - Processing
Accountability (A) – Outputs
I have tried to compile the characteristics that are measured in JAE, by no means it represent exhaustive list:
Knowledge and skills
* work experience
* qualifications
* external qualifications
* specialist training

People management
* human relations skills
* ability to deal with work pressure
* supervisory responsibility

Communication and networking
* social skills
* presentation skills
* diplomacy

Freedom to act
* depth of control
* supervision received

* judgment
* initiative
* analytical ability

Working environment
* knowledge of special working practices
* breadth of management skill required

Impact and influence
* efficiency
* impact on customers
* responsibility
* results of errors

Financial responsibility
* budgeting

There are some principles of Job evaluation are:
a. Job evaluation is an ongoing process.
b. Job evaluation is an evaluation of the role, not the person doing it.
c. A job evaluation scheme should be a fair system, understood by and communicated to employees.
d. It should be transparent, and reviewed regularly to ensure business needs continue to be met. The type of scheme chosen will depend on the organisation needs. But any staff making decisions on job roles will need training in the chosen system.
e. Evaluation is based on Job content which means job that has to be achieved.

Evaluation requirements are met by:
a. Job Understanding by means of job description
b. Judgments: JAE is concerned with making judgments in order to maximize the objectivity
c. Criteria for assessing job content: Number of criteria are required. The two most common criteria of job evaluation are: whole job ranking, where jobs are taken as a whole and ranked against each other; and awarding points for various aspects of the job. In the points system various aspects or parts of the job such as education and experience required to perform the job are assessed and a points value awarded - the higher the educational requirements of the job the higher the points scored.
d. A common scale of measurement is required against which to make judgments.
e. Cross-checks are required to ensure that the judgments are sound.

Involving employees in the job evaluation process can increase their commitment and further engagement with the organisation, but they must remain impartial at all times in the process.

Indian Automobile Industry: Driving to the stars


In 1933, Harlow H. Curtice, president of General Motors had said- “General Motors has no bad years, only good years and better years.” General Motors ruled automobile industry for over 50 years. In 1980, Japan for the first time surpassed the United States as the leading automobile-producing nation in the world. The point being driven here is, there is always something which customers want and even the leaders of the industry fail to see. Ever since then, the world order for leadership in the automobile sector has changed.
Image on the left shows the list of countries by motor vehicle production in 2007. The data for 2008 has been purposefully left out from this study as the current financial turmoil is assumed as a temporary phase, and that things would be back on track sooner or later.

India is currently at 10th position. However, the good news is that Indian automobile industry sales volumes are expected to grow to 3.7 million by 2012 – representing a CAGR of 13.3% (albeit a little lower due to the current financial crisis). The world is now moving towards less expensive and higher fuel efficient cars without compromising on luxury and safety, and this has strengthened the hand of the developing world’s emerging giants. China has become world’s largest manufacturer of passenger cars, though joint ventures with multinational OEMs account for the majority of volumes. Automobile Industry in India too, has come a long way. Time magazine has hailed Tata’s Nano among world’s 12 most important cars of all time. All these are auspicious signs, but fact remain that the Indian Automobile industry is far away from being best in the world. In this article, the strategies that Indian companies are adopting and should adopt to reach closer to the top, are studied. The outline of the article is as follows: Section 2 deals with the opportunities that the Indian automobile companies have in domestic market as well as in international market.

With opportunities come limitations as well. Section 3 talks about the challenges faced by Indian auto companies which could limit the expansion. Finally Section 4 talks about what companies are doing to overcome these challenges and also what they could do more.

2. Opportunities

Automobile demand is influenced by a number of socioeconomic and policy variables, more so in recent times. India has a large consumer base, growing middle class, lot of opportunities opening up, rapid expansion of local production and product launches, rapid rise in income – all these factors are poised to create exciting time ahead.

The Indian government along with support from OEMs and industry experts developed a revised Auto Mission Plan (AMP: 2006-2016) released in mid-2007. AMP Vision for India is “To emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$ 145 billion accounting for more than 10% of the GDP and providing additional employment to 25 million people by 2016”.

These trends have been noticed by the world community and many new market entries are being planned by major OEMs in India. India’s automotive industry is among the fastest growing ones in the Asia-Pacific region. Fastest growing segments are passenger cars; Mini, Small, Medium, Small Pickup, Medium Utility and Medium-Heavy Commercial Vehicles. Companies are looking to take advantage of these opportunities with its current product line-up, and future entries are also being planned in these segments. Introduction of the excise tax benefit for Mini segment vehicles in 2006 pushed up the industry growth. This has attracted foreign OEMs to setup their manufacturing plants in India. The Indian consumer rates technology, comfort and convenience as important considerations for car purchase.

3. Challenges

The challenges faced by India, on the road to becoming the No. 1 in the automobile sector, are also no less in number. Major problem is Infrastructure. India has always been lagging development where growth has pushed authorities to create infrastructure. Lot of infrastructure projects are taking long time for completion and development remains sluggish. Secondly, the Industry remains "Bottom Heavy" with unbalanced segment structure - About 70% of vehicles sold in 2006 were transacted at less than US$15,000. Indian automobile is still heavily skewed towards the low-priced mini car segment (40% of total industry in 2006) with an average transaction price of around US$7,300. Indian firms are not ready with design for advanced market. This means that a large sum of money is to be invested in either R&D or for inorganic growth. It is getting increasingly difficult for Indian companies to fund huge spending for R&D. Recent acquisition of Jaguar Land Rover by Tata motors was felt to be a hasty decision prompting Ratan Tata to say “We went too far too fast”, however such risks have to taken by the companies if they are eying to be a global leader.

India faces a serious threat from Chinese manufacturers. The pro-industry Chinese government policies and the low cost of manufacturing have given Chinese firms a slight lead over Indian firms.

Incidentally, China has overtaken Japan to become the 2nd largest market for automobiles. This has happened due to significant strategic and structural advantages: Chinese carmakers enjoy massive fast growing home market to scale up operations.

They also have significant cost advantages including labor costs and low capital investment. However, Chinese products suffer from quality lapses and lack of prioritizing market segments often paying less attention to marketing and distribution and this is where India stands to gain significantly since it has a better ‘quality’ standing in the global market compared to China.

4. How to face these challenges

Every problem has a solution, but the challenge lies in finding the solution. The following few aspects could possibly help the Indian automobile industry.

Entrepreneurial Aspects

Lee and Peterson (2000) have evolved a cultural model of entrepreneurship. They have proposed that a society’s prosperity to generate autonomous, risk taking, innovative, competitively aggressive and proactive entrepreneurs depend on its cultured foundation. Role of economic, political/legal and social factors are moderators in the relationship between culture and entrepreneurial orientation. Indian automobile company has to adopt entrepreneurship and take risk. There might be a few hiccups on the way but a strong entrepreneurial orientation will ultimately lead to increased competitiveness.

Research & Development

The car industry is different to, say, the mp3 player industry. An Ipod has only one design team, and will look exactly the same no matter where it is sold in the world. This is not the case with automobile industry. The relationship between innovation and market share is one of the cornerstones of economics of innovation and industrial organization at large. Innovators are expected to take advantage of their technological leadership in terms of profitability and market shares (Joseph Schumpeter). The introduction of innovations engenders a competitive advantage and hence a transient market power for innovators. In the developed world, technology has always played an important consideration for vehicle manufacturers as customers have always embraced state of-the art cars. Hence to boost the long-term market capitalization of their companies, executives should focus on new product introductions and resist relying on sales promotions. Although consumer incentives may yield increased short-term performance and/or prevent severe sales erosion while new product projects are in the pipeline, they do not provide a viable long-term answer to the manufacturer’s challenges in the industry.

Engineering Services

Managers should introduce new products and technologies that best complement their existing set of capabilities. Firms need to command a variety of different types of knowledge, so as to bring them together, exploit their complementarities and recombine them in order to introduce technological innovations.

Technological knowledge accumulated and generated within firms is the result of the mix of internal and external knowledge. In turn internal knowledge is generated by means of learning processes and research and development expenditures (Arrow, 1962a). External knowledge is acquired in a variety of ways, including the direct purchase of technological knowledge in the form of patents, services and intermediary research products delivered by third parties (Antonelli and Calderinib, 2007).

Firms should look at the Toyota Production System (TPS). The TPS has led to a movement of ‘lean production’ focused on taking waste out of value streams. Cost reduction is achieved through the use of just-in-time production. Another design worth mentioning here is the concurrent engineering method, still a relatively new design management system, but has become a well-defined systems approach towards optimizing engineering design cycles. Concurrent Engineering has overlapping phases of development, has failure analysis and vendor involvement in the early part of the cycle. These lead to reduced product development cycle time. Rapid learning along with empowered decision-making systems made concurrent engineering initiatives to succeed at Tata motors.

Firms should also look at technological outsourcing and Merger & Acquisitions. Technological diversification is a sign of eventual business diversification. Sometimes, technological diversification is the effect of the general exposure of firms to a new general purpose technology–such as plastics and new information and communication technologies.


After a home, an automobile is generally the second largest purchase a person makes. Therefore, most consumers spend a lot of time researching cars before buying one. This is where the internet has stepped up and become a powerful tool. Selling a car in these internet times takes a lot more than just nationwide television branding. It takes a multi-channel, long-term marketing campaign that follows the customer from initial research on the Internet to purchase in a local dealership. Firms have been successful in implementing direct response marketing. Direct response marketing is a form of marketing designed to solicit a direct response which is specific and quantifiable. The delivery of the response is direct between the viewer and the advertiser. DR has become an effective tool for cost-effective automotive marketing. DR can also provide metrics like ROl from marketing programs. "Many consumers see their vehicle as an extension of themselves. The trick is to tap into that emotion and pay it off with relevant product attributes they are looking for — gas mileage, safety, etc," says Mike Sheldon, president of Deutsch Los Angeles, a multi-disciplinary marketing and communications agency.

Internet Marketing

The advent of social networking sites coupled with technologies such as Web 2.0, which rely on user collaboration and include web services, peer-to-peer networking, blogs, podcasts and online social networks, have made internet marketing an exciting way of reaching out to prospective customers. With India poised to have the largest number of internet users, the prospect of selling and marketing through the internet seems bright for automobile companies. Already, some like TATA Motors are using the internet as an effective way of reaching the young audience. Concepts such as Viral Marketing (marketing your product with the help of a different concept) can help catch the attention of the growing internet users.

Supply Chain Management

On the demand side, there has been a tremendous increase in competition, product life cycles are getting shorter and shorter, and customer’s taste is constantly changing; all of this leads to high volatility in demand. It is difficult to predict customer preferences and trends, and it is even more challenging to identify and acquire relevant demand signals that are both accurate and timely. Firms should find ways to quickly sense customer demand and ways to respond to it. New analytical methodologies, IT framework, and collaborative decision-making processes are to be developed to better match demand with supply. As the Indian automobile industry prepares to make its mark globally, the need to improve supply chain efficiency is being given high priority as these lead to improved operational efficiency.

The CPFR (collaborative planning, forecasting and replenishment) program is being adopted by the auto industry. Enterprise Demand Sensing helps organizations to have the Right Product at the Right Place at the Right Time. CPFR can be used for better planning capacity requirements and replenishment activities. Indian firms have to develop sustained competitive strength through quality, innovation and delivery. Practices such as supplier capacity booking, use of Third Party Logistics Providers, shortening of product cycle time, lean methodologies and effective distribution through innovative techniques such as those used by Dell computers can help achieve this advantage.

Foreign Partnership

Tata Motors has expanded its operations in Europe and the Americas through partnership with Fiat. More and more European OEMs are teaming with Indian companies. It gives them access to the growing Indian market, low-cost production and engineering. Indian companies can leverage on such partnerships to be a global player. However, these partnerships have to be strategic in nature and have a long term vision of capturing the world market. A mutual benefit exercise could be one where the Indian company sells its cars through its foreign partner’s distribution channel while at the same time using low cost advantage of India to provide it with components and assemblies.

Create Brand Loyalty

Managers introduce new products as a way to deter or reduce the scale of entry, preserve industry profits by mitigating price competition, or to capture market share from rivals. Luxury producers change models less, and thus choose to maintain the stability and consistency of model designs over time. It is seen that European manufacturers rely on a single design over a longer period of time relative to their Japanese and American counterparts. This is because European consumers are more loyal to particular brands. Thus the European auto market is characterized by long product life cycles, heavy emphasis on engineering elegance, and sophistication. American market focuses on low cost, elaborate body style changes, and powerful engines. The Japanese market is probably the most competitive. Firms that can introduce models quickly to match rivals are successful. These learning can help to form strategies for global operation of Indian companies.


A company must balance to be successful in a global industry. For example, pressures for global integration include multinational customers, multinational competitors, and pressures for cost reduction. Pressures for local responsiveness include differences in customer needs, market structure, and the presence of substitute products. It is argued that successful companies develop unique strategies to respond to both kinds of pressures in varying degrees.

The first area for integration is pressures for global strategic coordination. The second area for integration is pressures for global operational integration. Third, managers need not always incur the high development and launch costs that are associated with major product innovations. Indeed, the U-shaped relationship between innovation level and long-term firm valuation implies that firms can benefit from “pulsing” innovations (i.e., provide minor improvements to their new market entries rather than engage in continuous intermediate-level innovation). A recent study of many categories indicates that “incremental innovations can be drivers of brand growth in their own right” if they represent additional consumer benefits and are introduced more frequently than competitor products.


The situation like recession is a reality check. To sail through such period a flexible system is required. The ability of the organization to cope with the internal changes requires a degree of redundancy in the system, whereas the ability to cope with the external change requires that the systems be versatile and capable of producing wide variety of parts with minimal change over time and costs (Buzacott 1982 and Chung and chen 1990). Descriptive research by Tichy and Devanna (1990) suggests that transformation of an organization follows a process, which includes a sequence of phases: recognizing the need for change, creating a new vision and then institutionalizing the change. Pro-activeness is the single characteristic that discriminates between manufacturing functions. Flexibility can be achieved through careful planning for different scenarios, having a flexible manufacturing system through deployment of lean techniques and an adaptive mindset. Indian automobile industry has felt a need of change and initiated the change process, mostly in a systemic way. But these firms should proceed to higher levels of change as the demand of competition increases.

Social culture

Firms should work for the community needs and view them as opportunities to develop ideas and serve new markets. Its only when community accepts the innovation, business can be successful. Indian companies should look to develop and use alternate sources of fuel. Tata is working with hybrid engine and fuel cell makers including Ballard Power Systems for using their technology in future models. These will not only make Indian companies competitive but also help to improve brand image on global level. In advanced countries, Indian car companies are perceived of producing cars of low quality. This perception if changed will provide great opportunities.

Strengthen the Human Resource Role

Indian automobile firms by going global, look to share and integrate the knowledge from both the world to create something new and stronger, not just bigger and HR has a crucial role to play in ensuring the success of this. One of the key success factors in an automobile company is achieving synergy through cooperation and coordination amongst various employees. Leadership vision along with HR plays an important role in this regard in unifying the employees toward a common goal. "Leadership is about taking the view that people capabilities are a source of competitive advantage", Satish Pradhan, executive vicepresident of group HR at Tata Sons.


Teams of intelligent people are required to execute. According to the resource-based perspective, successful organizations have unique capabilities or resources that give them an advantage over their competitors. Gersick (1994), has found that these resources are valuable when they are rare, inimitable and non-substitutable. Development of social capital within an organization is the source of competitive advantage for a firm.

Leadership skills

The role of leadership cannot be undermined. Companies have to embrace commitments to lead, to compete, to inspire and to learn. Leadership has to have a clear vision of where they want to be in the future and should accordingly create a mission statement that encompasses the same. Leadership should constantly endeavor to “raise the bar” for superior performance but at the same time also reward those who perform.

5. Conclusion

Approximately 900 dealerships left the business in 1991 in US. Similar numbers are predicted for 2008 and 2009. There is good news on the horizon. Private equity groups are bulish on the auto industry's long-term future. Manufacturers and suppliers could see infusions of capital the next several months. The industry appears to be on the cusp of significant technological advancements in vehicles. This alone will drive investment, create new business opportunities and generate excitement again in the showroom. Leading this is our automobile industry along with Chinese counterparts. Managing change is posing a big challenge to Indian firms in the wake of globalization and liberalization. Successful change demands that all major areas of an organization are kept in focus concurrently. These areas are technology, structure, systems, people and culture. It is seen that all these areas are interwoven and cannot be emphasized upon in isolation. It seems, looking at the how things are moving currently, Indian Automobile firms have done INDIAll not only to tackle the competition posed by foreign players in our soil but take the battle to their home turf. Indian Automobile Industry is Rising, Shining and Brimming with Success. Let's watch as they reach for the stars.

- Swapnil Saurav